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State Farm settles racketeering case

Two decades after the Avery decision on aftermarket parts, the insurance company pays $250 million to end hearing into its involvement in Illinois Supreme Court race
Thursday, September 20, 2018 - 07:00
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At the time, it was known that State Farm employees and others involved with the company had directly contributed some $350,000 to the Karmeier campaign. The plaintiffs in the Avery case had asked Karmeier to recuse himself, but he refused. In 2005, the Court overturned the Avery verdict in a 4-2 decision, with Karmeier casting a key vote.

The plaintiff’s attorneys hired a former FBI agent to investigate State Farm's involvement in the election. According to the findings, the insurer may have had a hand in selecting Karmeier for the race, and and may have intentionally obscured its involvement in the campaign.

In fact, the investigation turned up evidence that State Farm had contributed millions to Karmeier’s campaign by giving $2 million to the Illinois Civil Justice League (ICJL) and another $1 million to the U.S. Chamber of Commerce, which in turn gave $20 million to the Illinois Republican Party. The state party then contributed approximately $2 million to Karmeier, while the ICJL's political action committee (JUSTPAC) provided 90 percent of its contributions to the campaign.

The original petition further claimed that State Farm attorney Bill Shepherd was on an Illinois Civil Justice League committee that recruited Karmeier for the race, and may have even selected his campaign manager.

In 2011, the original class asked for the Supreme Court to reconsider the decision based on the investigation. When the Court refused, some of the plaintiffs in the Avery case filed a racketeering class action in federal court, alleging that State Farm and the ICJL had conspired to hide the company’s role in the election and also engaged in mail and wire fraud.

Justice Karmeier, who won re-election in 2014, was deposed in 2015. Earlier in 2018, a federal judge denied State Farm’s motions for summary judgment, which allowed the case to move forward. Karmeier has continued to deny that he knew where the campaign contributions came from. His testimony from the deposition will likely be made public once the settlement is approved. 

Prior to the settlement, U.S. District Judge David Herndon had ruled against State Farm several times in the months and weeks leading up to the trial. Herndon had denied five motions from State Farm to exclude experts for the plaintiffs, and seemed to generally favor the plaintiff’s motions over State Farm’s. Ironically, several of those decisions included barring testimony about funds that plaintiff’s counsel, The Clifford Law Firm, had raised for Gordon Maag in the original 2004 election as well as funds contributed to a campaign to unseat Karmeier in 2014.

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